AGRIBUSINESS: Lack Of Infrastructure Hurts Brazil Bean Exports

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In the state of Iowa, the average farm is about 333 acres, or about 250 football fields. In the state of Mato Grosso - West-Central Brazil's soybean production powerhouse - average farm size is just under 2,100 acres.

But the soybeans grown there are worth less than beans grown closer to ports, due to the difference in basis prices on Brazil's interior caused by a nonexistent transportation infrastructure.

Corn farmer John Frahm from Clear Lake visited Mato Grosso in March with other clients of Rabobank International, and says even on such a brief trip, it was clear that some of Brazil's most fertile areas suffer from nationwide inefficiency.

"All of us going over there felt like we're just a year or a few years away from being overtaken by Brazil, that their exports are going to dwarf ours; they're going to out-produce us. We came back home feeling the complete opposite, because of their logistical problems: they can't get the grains to the ports. Transportation throughout the whole country is a problem, and it's not getting solved. So we came back home thinking, 'You know, we don't have to worry.'"

Senior grains and oilseeds analyst Renato Rasmussen with Rabobank International in Brazil says a farmer in Mato Grosso is about 1,500 kilometers from the nearest port, and a well-maintained road from such a farmer's field to a port would have to run through several other states, not to mention political interests or regulatory agencies. Rasmussen says some projects like BR 163, which is a single highway connecting Mato Grosso to a port on the Amazon river to the north, have been decades in the making. In light of that, he says complaints about American roads ring hollow.

"Oh my God, you guys are blessed! You just should know that what you have here is lightyears ahead of what we have in any other major grain-producing region in the world